Final answer:
Income taxes are typically reported in the income statement and are allocated to the line item for discontinued operations, net of tax. They are not directly allocated to extraordinary items or prior period adjustments.
Step-by-step explanation:
The allocation of income taxes in financial accounting pertains to where the tax expense is reported in the income statement and how it correlates with various items that affect the overall tax calculation. Income taxes are not directly allocated to extraordinary items, as they are typically shown net of tax within the income statement. Similarly, income taxes associated with discontinued operations are typically reported as part of the separate line item for discontinued operations, net of tax. Prior period adjustments, on the other hand, are direct adjustments to the beginning balance of retained earnings and are not allocated to the income statement. Therefore, looking at the given choices, the correct answer would be 'b. discontinued operations' as taxes are allocated here to show the net effect of these operations on after-tax income. Nonetheless, in the context of the overall financial statement presentation, one could argue that taxes 'd. all of these' impact these items indirectly through their effect on net income or retained earnings. It is crucial to understand the financial reporting standards relevant to the treatment of taxes to properly allocate them in financial statements.